Daily Kos: Why the Stimulus is Needed

by bonddad

Sat Jan 31, 2009 at 05:53:28 AM PST

One point becomes clear when looking at the current state of the US economy: without a stimulus we are in deep trouble. Consider the following points from the latest FOMC statement from the Federal Reserve:

Information received since the Committee met in December suggests that the economy has weakened further. Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending. Furthermore, global demand appears to be slowing significantly. Conditions in some financial markets have improved, in part reflecting government efforts to provide liquidity and strengthen financial institutions; nevertheless, credit conditions for households and firms remain extremely tight. The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant.